These systems make use of information and communications technology in financial operations to support management and budget decisions and the preparation of financial reports and statements. These systems computerize the financial management (PFM) processes, from budget preparation and execution to accounting and reporting, with the help of an integrated system.
A finance and Accounting Information system stores, organizes and makes access to financial information easy. It stores financial information relating to current and past years' spending, but also stores the approved budgets for these years, details on inflows and outflows of funds, as well as complete inventories of financial assets.
The information is stored in the following way-
Simple General Ledger System to a comprehensive system addressing Budget, Revenue, Expenditure Control, Debt, Resource Management, Human Resources, Payroll, Accounting, Financial Reporting, and Auditing processes.
BEPL reduced time, operating costs, expense ratios and risk in finance and production department by implementing SAP through an automated, integrated process.
General ledger - SAP provide a comprehensive picture for external accounting and accounts - fully integrated with all other operational areas to ensure complete and accurate accounting data.
Accounts receivable - SAP record and manage customer accounting data via the accounts receivable component, connecting accounts receivable directly to the general ledger using a special reconciliation account.
Accounts payable - SAP record and manage vendor accounting data via the accounts payable component, connecting accounts payable directly to the general ledger using a special reconciliation account.
Tax accounting - SAP, you get full support for the calculation and reporting of taxes on sales and purchase
Features of SAP Business One
Accounting - automatically handle all key accounting processes, such as journal entries, accounts receivable, and accounts payable
Controlling (or cost accounting) - accurately manage cash flow, track budgets, and compare actual and planned figures
Banking and reconciliation - Quickly process all reconciliations and all bank statements and payments by various methods, including checks, cash, credit cards, and bank transfers
Financial reporting and analysis - Create a wide range of standard or customized financial reports from realtime data for business planning and audit reviews
Need for Accurate Cost Accounting
The production department in particular needed an infrastructure that would enable fast, accurate cost accounting in order to apprise management of the status of various projects and their adherence to cost targets. Given the impacts of risk on the decisions made by every group in the organization, this fragmentation made it necessary for everyone to make significant efforts to increase visibility of the risks they were managing in their day-to-day work.
In choosing a vendor, it identified the need for a solution that was scalable for future expansion, and was superior in terms of capability, reliability, and ease of use. Management faced some resistance from production teams and administrative staff, who considered the implementation of solution to be an extravagance. The management worked hard to obtain buy-in to the project throughout the company by emphasizing the long-term view, establishing a transparent financial structure and sound business processes based on best practices would deliver benefits that justified the investment.
Accounts Related Activities:
Expense Budget
Preparation of Annual Expense Budget (month-wise) for the year.
Managing the Branch Expenses within the sanctioned imprest limit and sending expense statement along with expense vouchers to VP(M) every Saturday.
Preparing variance analysis of actual expenses v/s budgeted expenses with due justification.
Banking
Ensuring timely deposition of all the cheques and transfer of funds as per HO A/c instructions.
Submitting bank report to Manager - CSA (HO) on monthly basis.
Outstanding Statement
Taking approval on debit / credit note, etc. from VP (M) and sending it to Manager - CSA (HO) on Daily basis.
Updating branch O/S statement on daily basis.
Sending outstanding statement to customers and obtaining account confirmation from them.
Collection of Sales Tax Forms
EXPENSE BUDGET
Preparation of Annual Expense Budget (month-wise) for the year
Every year during the first week of March the Branch Head will prepare Annual Expense Budget for his respective region and submit it to VP(M) for approval. While preparing this expense budget the Branch Head will ensure that the total expenses per unit of business generated
are reduced or at the most maintained at the same level of previous year. However in case any extra ordinary expense is expected which is inevitable Branch Head will give due justification for the same. Further in case expense under a particular head is expected to go beyond desired limit Branch Head will attempt seriously to reduce the expenses under other heads in order to keep the overall branch expenses within the expectable limit.
Managing the Branch Expenses within the sanctioned imprest limit and sending expense statement along with expense vouchers to VP(M) every Saturday.
Once the Annual Expense Budget is approved by VP(M) the Branch Head will ensure that the actual monthly expenses of the branch are kept within the sanctioned limits. To ensure that the expenses are kept under check Branch Head must review on weekly basis the actual expenses incurred during the week and take suitable remedial/corrective measures wherever and whenever required.
Since the imprest amount is limited Branch Head must send periodically expense statement in the format as prescribed by the Accounts Department, along with relevant expense vouchers to VP(M) for his approval and timely reimbursement of expenses. It is suggested that this exercise is done on every Saturday which will ensure that the reimbursement amount is received every week and no situation arises wherein the branch work suffers on account of non-availability of cash.
(c) Variance analysis of actual expenses v/s budgeted expenses with due justification.
B. BANKING
(a) Ensuring timely deposition of all the cheques and transfer of funds as per HO A/c instructions.
(b) Submitting bank report to Manager - CSA (HO) on monthly basis.
C. OUTSTANDING STATEMENT
Collection of Debtors
Procedure for Credit memo Request process for Qty Discount, Sp. Credit memo/Debit memo will be followed in SAP through transaction code "VA01" Doc Type " ZCRQ, ZCR ,ZDR respectively.
(a) Taking approval on debit / credit note, quantity discount, etc. from VP(M) and sending it to Manager - CSA (HO) on Daily basis.
(b) Updating branch O/S statement on Daily basis.
(c) Sending outstanding statement to customers and taking account confirmation from them.
New Colour Development :
New colour development and matching is the strength in ABS marketing not only to get into business but also to retain the customer on long term basis on the strength of colour consistency and exclusivity. The following procedure shall be followed, so that Branch Heads can give commitments to the customers regarding developments of new colours. New colour shall be matched only if potential is for a minimum of 3 MT per month.
a) Requisition for Colour Matching :
The Branch Head shall send requisition through Quality Notification in SAP for colour matching to VP (Works) / DGM (Compdg.) / Colour Matching Dept. (CMD) giving the details as mentioned in the Annexure 5.
b) Developing Colour
On receipt of requisition from the Branch Office, DGM (Compdg.) shall check the availability of necessary powder as well as pigment stocks in plant and shall advise Branch Head through VP (M) in case of likely delay beyond 15 Days. Thereafter, the colour matching requisition shall be sent to CMD by DGM (Compounding).
c) Submission of Colour Chips :
Compounding Department shall develop the colour chips and DGM (Compdg.) will send the same to respective Branch Head invariably within one week with an intimation to VP (M) / VP (Works). Colour chips moulded at different temperature parameters and cycle time should be sent. Colour code shall be provided by CMD. Even after following up with VP (Works) if colour chips are not received within 15 Days, then Branch Head will request VP (M) to do needful
d) Colour Approval by Customer:
Branch Head will forward the colour chips received from plant to respective customer alongwith covering letter as per format given in Annexure 24. Final colour approval from the Customer must be obtained by taking their approval signature on the reverse of the colour chips and one each of such colour chips shall be retained with respective branch office as well as VP (Works) / DGM (Compdg.) / CMD. The Branch Head will then raise a Sales Order ( DA ) for 25 kg material as "free sample" for taking trial of the material. Once the trial is approved at customer's end, the Branch Head will obtain commercial orders from the customer. Approval of Colour Chip shall be updated in the Quality Notification by Sr Manager ( CMD).
e) Costing :
VP (Works) will send a communication to VP (M) with a copy to ED (C), on the actual costing of the colour and a decision shall be taken by ED (C) whether to market it as a special colour at a higher price or at standard price as a marketing strategy.
At the time of first commercial order being serviced, the plant will send 10 colour chips to each Branch Office/Sub-Branch Office at various locations. Once the new colour is successfully commercialized, VP (M) will communicate to all the other regions so that they can promote the new colour wherever possible.
Payment Terms:
The order is processed only when payment is against Letter of Credit (L/C). Sr. Manager (CMO / Exports) shall examine the original L/C received from the customer and arrange to get amendments made; if required.
Once the clean L/C is received, Exports Dept. will prepare Sales Order ( DA ), get the approval from VP(M) and send the Sales Order ( DA ) to Unit I / Unit II.
12 Statutory Requirements
Branch Office functions are subject to scrutiny by statutory authorities. Branch Head being the principal officer of the company in the respective location, must adhere to the Company Policy, Central Govt. Laws, respective State Govt. Laws, rules and regulations of other governmental agencies/local authorities, etc. and maintain up todate records as he is answerable to the statutory authorities for their respective operations.
Sales Tax Requirements
As Sales Tax authorities have jurisdiction over operations, it is mandatory for all Branch Heads to maintain records of all the customers' w.r.t. copies of invoices, CNs and DNs.
Govt. Laws, rules and regulations of other governmental agencies/local authorities, etc. and maintain upto date records. Branch Head will also ensure that the Consignment Agents abide by all the clauses set out in the Agreement signed by them.
Collection of ST Forms
As explained earlier once the sales have been effected under Concessional Sales Tax Form, such as Form 'C' / Form 'F', etc. it is extremely important that these forms are collected from the customers in time and sent to CSA-HO.
Branch Head will ensure that the Sales Tax Forms are collected from the customers in time and sent to CSA-HO by keeping photo copies for branch record. Branch Head will ensure that all the required information and ST Forms are submitted to Sales Tax Authorities at the time of Sales Tax Assessment.
Shops and Establishments Act
Branch Head will confirm compliance with procedures under Shops and Establishments Act like Notice Board display, office timings, number of persons employed, etc., as well as various registers to be maintained. As laws in each State are different, respective Branch Head must follow the prescribed law and confirm to HO on monthly basis that the same are complied with. List of documents being maintained shall be furnished to HO-P&A department.
Professional Tax
Payment of Professional Tax wherever applicable shall be made at a respective location and returns filed accordingly. Branch Head will check upon the same and follow the procedures under advice to HO-Accounts.
Earlier system
In BEPL, initially Oracle was used as software but it was very difficult to maintain financial records and historical data .There were 10 to 12 accountants who were managing accounts and finance records. This created confusion and was very difficult to handle them.
Compared to SAP, it did not have many modules. It did not meet high level of security and reliability. So BEPL installed SAP.
SAP chosen as New System
SAP (Systematic Application Products) is the leading Enterprise Information and Management Package worldwide.
It make possible to track and manage sales, production, finance accounting and human resources in an enterprise.
A company has many separate systems to manage different processes like production, sales and accounting. Each of these systems has its own databases and seldom passes information to other systems in a timely manner.
SAP takes a different approach. There is only one information system in an enterprise, SAP. All applications access common data.
Accounting is done automatically by events in sales and production. Sales can see when products can be delivered. Production schedules are driven by sales.
Why SAP?
It is to easy to use and high reliability and availability of more modules. It creates more efficient accounting system. It helped in reducing cost and increased efficiency. It implements a flexible, scalable solution for managing company growth.
By implementing SAP, finance department got acquainted with the market price of the ABS and they don't need to contact other person. This has helped in reducing cost and increased efficiency.
Change in the business process
Configuration of new system made it easy to maintain financial records and information. It has increased the daily cash processing freeing up staff time for other analysis. With daily posting reconciliation, the quality of information has improved. As a result the month end closing process do not consume much time.
The detailed bank account statements update the opening ledger balances of the cash position and are automatically posted to the SAP R/3 general ledger as a part of an automated reconciliation of prior day activity.
The account department do not have to spend days making journal entries or working on the month end closing. All the entries are booked on day to day basis.
Modules of SAP
Sap contains 72 modules. Some of them are as follows:
Sales Opportunities Module, where existing customers and potential accounts are structured tracking.
Sales Module, where orders are entered, shipped and invoiced.
Production module where sales are forecast in production planning model.
Purchasing Module, where purchase orders are issued and goods received into inventory.
Administration Module, where configuration is performed.
Financials Module, where various accounting and financial activities are conducted..
Sequential Walk in SAP
Sales
Pre-sales activity--planning and availability support for the sales personnel
Sales Order--The actual entry of the sales order into the system done by the salesperson at the point of sales perhaps using a PC and Internet connections.
Determining where the most efficient source of the ordered product is in inventory and shipping it.
Delivery.
Customer Billing.Customer Payment.
Production
Sales and Operations Planning SOP where the sales forecasts are used in a production planning model to check feasibility.
Master Production Scheduling MPS--The actual plan for the whole production process.
Material Requirements Planning MRP--Where the production plan is actually converted into raw materials input requirements.
Planned Order--When materials are available and capacity exists this plan is created and then converted into a Production Order.
Shop Floor Control where the actual production takes place and is registered into the system as finished goods.
Purchasing
Requisition--Once the Production manager plans to manufacture something a requisition for the raw materials required but not on hand must be prepared.
Vendor Selection--made by the purchasing department.
Purchase order sent.
goods receipt increasing inventory.
Invoice verification as it is received from vendor.
Payment to vendor.
Finance and Accounting
Sales events must be captured at the proper time into the ledger system
Inventory must be adjusted to match goods shipped.
Inventory must be adjusted to match raw materials received.
Inventory must be adjusted to move value from raw materials to work in process.
Inventory must be adjusted to increase finished goods when they are produced.
Accounts Payable must be set up for purchases.
Accounts Receivable must reflect goods billed but not yet paid for.
